Not too many, I predict. TC is a very large estate and a lot of hassle for any en bloc lawyer. I would like to see a legal firm that stipulated a non-refundable up-front fee from signatories to the CSA. This will keep the lawyer honest as the no-sale-no-fee basis of engagement is fraught with conflict of interest. I would also like to see a legal firm that conducted either monthly mass signings or require owners to visit the legal office. What is NOT acceptable is for en bloc lawyers showing up at doorsteps alongside marketing agents at midnight goading owners into signing on the spot. It is a dubious practice and highly unprofessional. This kind of behavior is akin to touting.
From a previous post: No Sale No Fee
It is no surprise that lawyers and marketing agents readily agree to this contingent fee whereby they are not paid until after the sale has been approved and after the buyer has deposited the sale proceeds into the owners' bank accounts. After all, the chances of the sale NOT being approved are minimal and the rewards of a successful en bloc are great indeed. It is almost a certainty that they will be generously recompensed for their costs and expenses at the end of the day. The substantial reward is therefore worth the risk. The owners have agreed to a minimum sale price in advance which becomes the target price at which they can sell. The CSA is a veritable straightjacket of clauses pinning owners down without indemnity. It is in the en bloc lawyer and marketing agent's best interest that the sale be swift and trouble free.
The legal profession in Singapore in general does not work on the American style contingency basis - that is, lawyers getting paid only if they win the case. It is forbidden here in order to discourage frivolous litigation and inflated claims; and it works. The Law clearly understands how neither the Law nor a client's best interests are served well if the lawyer has a financial stake in the outcome of the case. Basically, it keeps people honest and their motivation pure.
But the Law does allow a 'form' of contingency payment in en blocs. Granted, it's not quite the same as the en bloc lawyer's fee is set out in advance in the CSA (see First Schedule 3.(c)) - the only unknowns are the disbursements and possible extra costs such as High Court expenses, Senior Counsel fees etc. But it's still No-Sale-No-Fee, and provides a powerful reason d'etre to push a sale through.
In the past, normal practice would have the en bloc lawyer, as stakeholder, being entitled to the interest derived from the monies held - and when you are dealing with multi-millions, you are talking about a very big sum indeed. The longer he held onto he money, the more interest accrued. A reason to stretch out the process, perhaps. But no more.
And in the First Schedule, the CSA must state:
3 (e) the person entitled to any interest derived from moneys held by any stakeholder; and
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Let me cite from the transcripts of the Tampines Court STB Tribnal proceedings, dated 16/17 June, 2008. (cross examination of marketing agent by minority lawyer, names are deleted)
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Q. I’m putting it to you that all you were interested in was closing some deal to get your $1.9 million in commission; agree or disagree?
A. Ultimately, yes.
Q. I’m putting it to you that you did not help the sales committee get an independent valuation that would give them a chance to assess your reserved price of $389 million; do you agree or disagree?
A. It’s not necessary to do so.
Q. I’m suggesting to you the only reason why it was not necessary to do so was in your interest, (property agency)’s interest.
A. Interest, ultimately, yes, upon the sale completion of the en bloc sale.
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Marketing agents and serial en bloc lawyers have an ongoing professional relationship with buyer- developers, both big and small. They have only a fleeting, one-off relationship with an en bloc estate. No cigar to anyone who knows which relationship is more important in the long run...
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At the outset of an en bloc, owners have two choices in the matter:
- Stick to the status quo and beware or
- Pay legal fees up front
CHOOSE 2!. How else are you to ensure your best interests are being served? How else can a lawyer not find himself betwixt and between his clients' best interests and his own? The marketing agent always works from commission so he can be left to the end. The lawyer is de-linked from the MA and has no pressing reason to sell fast and low. Having an uncompromised lawyer drawing up an owner-friendly CSA, keeping a watchful eye on the process, being present at the negotiation table and at the signing of the S&P can only be to the owners' advantage.
Feed the sharks, and maybe, maybe they won't eat you.
do you recommend we pay the full or partial
ReplyDeletelegal fees up front?
legal fees usually range between 0.25 % to 0.45% of the proceeds. Even if u pay 25% of the legal fees upfront, it will cost at least $1k to start the process. do u think owners will pay and sign without a hint of success? Furthermore, the lawyer will similarly be motivated to close the deal to get the balance 75% of the fees.
ReplyDeletehigh upfront cost is a sure way to en bloc failure. either you get a lawyer owner to be in the sc or u pay for neutral advice.
Greed is the underpinning force that drives an en bloc down the wrong path. Cheapskate owners who want a sale but are not willing to put down the money to ensure a clean procedure. Legal sharks who are keen to give it a whirl, confident in their bag of tricks pulling the deal through.
ReplyDeleteGreed can be minimized.
1) The lawyer should be paid enough to make his efforts worthwhile, regardless of the outcome, and he should be paid the market rate for legal stamping by individual owners signing the CSA.
If we have to pay extra for neutral advice as you suggest then his legal fee should be halved! And his fee should not be a percentage of the sale price but a set $xxxx per unit (incl GST, disbursements etc).
2) Owners should show some moral rectitude this time round; since they are doing nothing less than expropriating other people's homes. What is $1k+ when they dream of making $1.5m+?
Like it or not, it costs money to get the best people and to do the job well. Any lawyer than stands up and says he will do it for free unless there is a sale will not get my vote of confidence. They are the bottom feeders of the profession.
you are right, greed is the issue... So u will not get impartial service from the lawyer unless u pay their fees in full... Any amount to be paid on success will tempt any individual to close the deal fast.
ReplyDeletePerform your own dur dilligence. Learn from the likes of farrer court and the ma y succeasful enblocs.
i'm in advisory but in banking not law. usually, what we do is a retainer of $x/mth to cover costs, and then a success fee based on upside. That's the normal practice even for goldman.
ReplyDeletethe proposal to pay legal fees upfront will no yield the desired result. U pay the full fees and you will not get 30%. pay a small portion and the lawyers will still be motivated to sell. Just not practical.
ReplyDeleteWill the proposer pay n sign the csa?
There are many dishonorable ways to 'yield the desired result', but that does not mean we should use them. There is no guarantee of a sale no matter which way you turn.
ReplyDeleteIf 80% of the owners are not serious about selling and baulk at taking a 0.1% gamble on their dreams then so be it.
If ownersy vote for an ambulance-chasing lowlife of a professional then they will also have to put up with a developer-friendly CSA, he may smile and be courteous at the beginning, but the knives will come out at the end; threats of litigation if they speak out and all their rights as legitimate owners of their homes taken away. You can't have one without the other.
It's a case of been there, done that.
In round 1, owners can be forgiven for being too trusting and gullible.
In round 2, owners can take the high road and do the thing properly.
0.1% will not make a difference la.
ReplyDeletethe rules for round 2 and round 1 is differnet. If you are not aware, there are new rules to ensure transparency in the process and reduce the risk of dishonourable acts.
Though we should learnt from Round 1, we should not be overhung by our mistakes and become paranoid, or too 'distrusting'. Yes we should do things properly, but paying for legal fee is not one of them. Sourcing around the market, I know there are many honest lawyers around,(of course there are bad ones) who will do a good CSA for us.
ReplyDeletePay Peanuts Get Monkey
ReplyDeleteIf the deal is "No Sale No Fees", the Lawyer Die Die also must make the sale happen regards of how you TC owners feel about it.
Just like en-bloc raiders who would engage such a lawyer. For them, no sale means no fees - enbloc raiders win. When the sale is pushed even with bad deal, en-bloc raiders will still get their money from the sale. Win-Win for them. Lose-Lose for resident-owners.
BTW, you should read the STB Tribunal's remark in round 1 on the "no sale no fee"...
pay little up front = no impact to lawyers
ReplyDeletepay too much and u will not get the 80%
ccheck out how farrer count or pine grove did it?